Let’s play the economic recovery alphabet game.
But what about an X-shaped recovery — none at all?
Peter Morici, University of Maryland professor and former Chief Economist at the U.S. International Trade Commission, says even if there’s a V for Wall Street, most working people will see nothing — an X.
Morici argues that the economy is essentially running on steroids. Increases in home and car sales are artificial; Wall Street profits because its banks are too big to fail while smaller regional ones are in bad shape; and many businesseses are just rebuilding depleted inventories and replacing outdated equipment and federal stimulus dollars.
Here’s Morici’s solution:
Real Clear Markets: The country needs pro-growth policies-fixing the huge trade deficit and the banks.
Dollars spent on imports that do not return to purchase exports can’t be spent on American products. That saps demand for American-made products, keeps factories and offices shuttered, and idles workers.
The trade deficit is mostly oil and Chinese consumer goods. Export more, import less, or the economy flops.
Without bank credit, businesses can’t expand, entrepreneurs can’t create, and workers don’t work.
Obama dodges the toughest aspects of the banking morass. Compensation structures built on the too big to fail doctrine permit Wall Street to take huge risks, shift losses onto smaller investors and the government, and suffer too few consequences for their calamities. Until those change, Wall Street bankers will be too busy chasing rainbows to adequately reestablish lines of credit to regional banks essential for business expansion.
Buy only as much as you sell, reasonable pay for honest work, and let the reckless fail.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.